Amortization Calculator
See exactly how each payment splits between principal and interest over the life of a loan.
About Amortization Calculator
Early in the loan most of each payment goes to interest; over time the balance falls so more goes to principal. The schedule shows your remaining balance year by year until payoff.
Formulas
Monthly payment
M = P · r / (1 − (1+r)^−n)
- M
- Monthly payment
- P
- Loan principal
- r
- Monthly interest rate = Annual rate ÷ 12
- n
- Loan term in months = Years × 12
Per-period split
Interest_k = Balance_k × r ; Principal_k = M − Interest_k
- I_k
- Interest portion of payment k
- B_k
- Remaining balance before payment k
- P_k
- Principal portion of payment k
Worked example
With the default values below, Amortization Calculator returns Monthly Payment of $1,498.88. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Loan Amountaccepts 1,000–5,000,000 $
- 250,000 $
- Annual Interest Rateaccepts 0–25 %
- 6 %
- Loan Termaccepts 1–40 years
- 30 years
Results
- Monthly Payment
- $1,498.88
- Total Interest
- $289,595
- Total Paid
- $539,595
Step by step
- 1Monthly interest rate: Annual rate ÷ 12= 0.5000%
- 2Total payments: 30 yr × 12= 360 months
- 3Monthly payment: M = P · r / (1 − (1+r)⁻ⁿ)= $1,498.88
- 4Total paid over the life of the loan= $539,595
- 5Total interest: cumulative interest accrued each period= $289,595Each month: Interest = Remaining Balance × Monthly Rate; Principal = Payment − Interest.
Assumptions and limits
- The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or fees or charges into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- Estimates only and not financial advice.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Amortization Calculator — full guide
Why a fixed payment feels different every year
A fixed-rate loan has one payment amount and two moving parts inside it. Interest is charged on whatever you still owe, so when the balance is large the interest slice is large and the principal slice is thin. As the balance falls, the interest slice shrinks and the principal slice swells — the payment never changes, but its job does. An amortization schedule is simply that split, written out.
People reach for this when deciding whether a prepayment is worth it, when checking how much equity a mortgage has built, or when a lender's payoff quote looks higher than expected.
Two formulas, applied in sequence
The payment comes first:
M = P · r / (1 − (1 + r)^−n)
where P is the loan amount, r the annual rate ÷ 12, and n the term in years × 12. Then each month is decomposed:
Interest_k = Balance_k × r and Principal_k = M − Interest_k
Subtract the principal portion from the balance and repeat.
The default loan, step by step
$250,000 at 6% for 30 years. Monthly rate 0.005, 360 payments, payment $1,498.88.
Month 1: interest is 250,000 × 0.005 = $1,250.00, leaving $248.88 of principal. Only a sixth of that first payment touches the debt.
| End of year | Balance | Principal paid that year | Interest paid that year |
|---|---|---|---|
| 1 | $246,929.97 | $3,070.03 | $14,916.49 |
| 10 | $209,214.31 | $5,261.11 | $12,725.41 |
| 20 | $135,008.97 | $9,572.04 | $8,414.47 |
| 30 | $0.00 | $17,415.34 | $571.17 |
Across all 360 payments you pay $539,595.47, of which $289,595.47 is interest — 53.7% of the total.
Interpreting the shape
The crossover, where principal finally exceeds interest in a single payment, lands on month 223 of 360: $745.78 interest against $753.09 principal. Ten years in, you have cleared under 17% of the balance. That asymmetry, not the headline rate, is what makes early extra payments effective: every dollar sent now removes all the future interest that dollar would have generated.
Adding $250 a month to the default payment clears the loan in roughly 252 months instead of 360 and cuts interest by about $100,000.
Limits of the schedule
- Principal and interest only — no escrow, property tax, insurance or mortgage insurance.
- One fixed rate throughout; adjustable loans re-amortize at each reset.
- Payments are assumed on time and equal. Daily-interest lenders will differ by a few dollars.
- Rounding means your lender's final payment will be slightly off the pattern.
Estimates only, not financial advice.
Related: Mortgage Calculator, Refinance Calculator, EMI Calculator.
Guides that use this calculator
- Understanding Mortgage Amortisation: Where Your Payment Actually GoesWhy early mortgage payments are almost all interest, how overpaying works, and how to read an amortisation schedule properly.5 min
- How EMI Is Calculated (And What Prepayment Actually Saves)The EMI formula worked through on a 25 lakh loan, why early instalments are mostly interest, and what tenure and prepayment really change.5 min
Estimates only and not financial advice.
Frequently Asked Questions
Why is early interest so high?
Interest is charged on your outstanding balance, which is largest at the start. As the balance shrinks, the interest portion of each fixed payment shrinks too.
How can I pay less interest?
Make extra principal payments, choose a shorter term, or secure a lower rate — each reduces the total interest paid over the life of the loan.
At which payment does principal finally overtake interest?
On the default $250,000 loan at 6% for 30 years, it is payment 223 — about 18 and a half years in. That month splits $745.78 to interest and $753.09 to principal. The crossover arrives later with higher rates and longer terms; on a 15-year loan at the same rate it happens in the first few years.
What exactly is included in the Total Paid figure?
Principal plus interest, nothing else: $539,595.47 on the defaults, which is the $250,000 borrowed and $289,595.47 of interest. Property taxes, homeowners insurance, mortgage insurance, HOA dues, origination points and closing costs are all outside the calculation, so your true cash outlay on a mortgage will be considerably higher.
How much principal do I retire in the first year compared with the last?
Year one clears $3,070.03 of the balance while $14,916.49 goes to interest. Year thirty is the mirror image: $17,415.34 of principal against just $571.17 of interest. Both years cost you the same $17,986.52 in payments. Nothing about the loan changed except the size of the balance the rate is applied to.
Does the schedule assume every payment lands exactly on its due date?
Yes. The model uses equal monthly periods and applies the monthly rate once per period, which matches how most fixed-rate mortgages are quoted. Lenders that accrue interest daily will produce slightly different figures depending on when your payment clears, and a late payment adds interest the schedule never shows.